It's official: Clive Cowdery won't be making serious money from his new Resolution business. Not that the multi-millionaire's scheme to knit together a string of undervalued life insurers and sell them off again within five years is in trouble. It's that Cowdery will give almost his entire stake in the business to charity.

The last time Cowdery pulled off the trick of squeezing margins from hitherto untouched parts of the insurance industry, he bundled together life funds that had been closed to business, so-called zombie funds, and sold out for £5bn to Hugh Osmond's Pearl Group. Cowdery netted a personal fortune of about £150m.

This time 60% of management profits from his second venture will be used to fund his charitable foundation, called the Resolution Trust, which focuses on the plight of hard-working families – the people who play by the rules and don't rely on state handouts. He set up the trust five years ago with £20m from selling shares in the first flotation.

Cowdery says he is not donning sackcloth and ashes and attempting to soothe popular resentment of the City by discovering the joys of philanthropy. He sees the cash as "payback" to a section of society he always admired – the working poor – and to make a point about the "windfall profits of the financial sector".

"You cannot describe projects in the financial services sector as anything as socially valuable as creating industrial wealth. The size of the financial sector in Britain has become a good question for review," he says, adding for good measure that much of financial services boils down to just "extracting rent from industry".

Despite becoming a multimillionaire from working in the City, Cowdery makes it clear that he thinks finance has become too big for the good of the economy – leaving Britain bereft of an industrial base and unable to provide millions of jobs for semi-skilled labour.

About a third of the financial services, he says, is simply an "oligopoly" which has stunted the growth of business by charging exorbitant fees for raising capital – thereby robbing companies of the cash to invest and build businesses.

"Bankers take roughly 3.5% in fees every time you sneeze. You raise £500m, that's £17.5m for them up front. They get the safe bit. They don't do anything. All this argument about creating wealth by creating risk capital is bollocks. We need labour absorptive industries so that we can create jobs. That's the problem."

He may be blunt, but it would be wrong to underestimate Cowdery. For someone who could not read until he was 10 and could not write until he was 12, his ability to make money has brought him the right to think aloud in public and influence the right politicians at the right time.

Inequality

Today, Labour leader Ed Miliband will make a keynote speech on the "squeezed middle" at the launch of Cowdery's commission on living standards. The 15-person commission, which will include top industrialists such as Phil Bentley of British Gas and bankers such as Lloyds' chairman Sir Win Bischoff, is the culmination of five years' hard thinking about the growing chasm between the rich and working poor in Britain.

He's not making a party political point. Cowdery says he is personally of the "centre left" and has given small sums – "below £5,000" – to both Labour and the Liberal Democrats. He bankrolled Nick Clegg's commission on social mobility in 2008 but also counts Tories such as David Willetts, the higher education minister, among his friends. Instead he points out that work by the Resolution Trust shows that Britain since 2003 has mimicked US-style income inequality where wages at the top have shot ahead of the lower classes – and the top 1% swallowed up 60% of income growth. Shockingly, average pay in Britain will be no higher in 2015 than it was in 2003, after taking account of inflation.

To make his point Cowdery funded a documentary, The Flaw, that wowed liberal audiences at the Sundance film festival last month for pinpointing the root causes of the financial crisis. It begins with Alan Greenspan's mea culpa at the banking committee of the US Congress.

If Britain were to follow the American model, says Cowdery, "the decoupling of society will see a permanent underclass of the working poor unable to get ahead with no way up or out".

"The whole debate at the moment is about welfare dependency but I am talking about imprisoning those who work hard at the bottom of society."

Cowdery does not wear his social conscience lightly. The reason is personal – he "grew up on the welfare state". Raised as one of five children by a Danish single mother in Bristol, Cowdery's early life was poverty-stricken and chaotic – often the family was turfed out of bedsits for not paying the rent with the six of them ending up on the streets going hungry. He spent time in foster and care homes, before a kindly doctor in upmarket Clifton took pity on the family and sent him and his brothers to be looked after by an evangelical church group in the seaside town of Clevedon. He was nine. Until then Cowdery had no formal education.

Passion

It was there that two teachers took a special interest in him, teaching him to read and write. Books remain a passion today and his desk is littered with heavy tomes about welfare and economics.

He begins our interview with a detailed retelling of the White Tiger, remembering places and characters of the Booker prize-winning story about a servant's murderous revenge upon his wealthy employer in modern day India.

Cowdery left school at 16 with three O-levels – English, history and religious studies. Eventually, he says, the family was put into a local authority-funded house. "The welfare state gave me an education, my health, housing and food on the table."

He left and worked in the church – helping the poor in Cornwall and, for a brief stint, in New York with ambitions to become a minister. But God and Cowdery parted ways in his 20s. "I was 26 and figured out there was a difference between religious and social goals. I don't have religious beliefs today."

He chose insurance as an industry because he had a family and could get a loan to kickstart a career as an independent adviser. Ten years on he had made a million and 100 times that a decade later.

His early life left an inedible mark on Cowdery. "Business has been good to me. But I grew up looking up to people who worked hard and saved up. Most of my friends are still there and I still feel like I belong more down there than up here."